Just off Interstate 35, not far from the University of Texas at Austin campus, young mothers sit on stone benches at the edge of a small lake. Children feed the ducks and pigeons. Retirees power-walk along manicured paths.

This park is part of the 700 acres that used to be the city’s Mueller airport. When Austin opened its new airport in 1999 it decided to transform Mueller into a mixed community with retail stores, a children’s museum, a hospital and – most importantly – housing, for rent and for sale.

For UT employee Janeka Rector, buying a house in the Mueller community was a chance of a lifetime.

“We’re here at my house. I know everybody who lives on my block and everybody who lives on this street,” the 37-year-old says as she shows off her two-story, 1,400 square foot home with potted plants sitting on her front porch.

Because of its central location in a city with wildly escalating home prices, many Mueller homes sell for $400,000 to $1 million.

But the city requires 25 percent of the houses be affordable for owners who earn no more than 80 percent of the city’s median income. With a salary of $43,000 and good credit, Rector qualified.

“I was renting. My rent was untenable. It kept going up and up. It was over a mortgage,” she says.

While Rector’s house would have sold for much more on the open market, the price for her was $189,000. She put $1,500 down and qualified for the loan. Mueller’s non-profit foundation backed the sale with another $100,000 lien.

“Unless I purchased in a suburb or had gotten far away from the University of Texas where I work, I don’t think I would have been able to find an affordable house,” she says.

As a participant in the affordable housing program, Rector can earn no more than 2 percent profit for each year she lives here if she decides to sell. The foundation gets the first shot at purchasing the house so it can be offered to another affordable buyer.

Dee Desjardin is with the Catellus Corporation, which is developing Mueller. She says segregated housing creates a segregated city.

Planners have said that can perpetuate cycles of poverty and blighted areas with few amenities. Grocery stores and retailers that won’t locate in neighborhoods with predominantly low-income residents will place their stores in mixed income neighborhoods where there’s enough disposable income to be profitable.

Desjardin says Mueller was designed so that you can’t easily identify the affordable houses as you drive through the community. They’re interspersed with more expensive homes. Across the street from Rector, for example, is a house appraised at $486,000. Homes across from the park two blocks away would reportedly sell for close to $1 million.

“There was a desire that the affordable housing at Mueller be indistinguishable,” explains Desjardin, “so the design character, the quality of the home construction is consistent across the board. The home sizes may be a little different. The configuration may be a little different, but within each phase of housing there is a selection of affordable homes.”

The affordable homes include townhouses, grouped around a shared yard; condos, four to six in a building; detached homes.

No matter the value, however, there is one very consistent feature – no big yards. In many cases, there are no yards at all. Just seven feet separates Rector from her neighbors.

“If you have kids, you may want the big yards. The advantage here is we have parks to make up for the lack of space. The density is great because you get to meet so many interesting people,” she says.

Desjardin says the small yard concept is part of a new urbanist development philosophy, “where you build your buildings on a small land footprint in order to preserve open space.”

Desjardin admits Mueller isn’t right for everyone, especially if they want a Texas-sized yard or a separate workshop. But she says residents are drawn by the walkability of the community; having parks and trail near their doorsteps; and being close to downtown.

Some San Antonio developers say building a mixed income neighborhood like this would be risky. Owners of million dollar homes might worry the $200,000 homes several doors down would diminish the value of their properties.

Aiden Cohen, who owns one of the pricier Mueller homes, says that’s not his experience.

“We’ve lived here since 2011. Our house has gone up in value by probably 75 per cent. I am not worried about the resale value because they designed this neighborhood correctly so you can’t identify where the low-cost housing is. So they’ve integrated it in a way that avoids a stigma.”

It all seems like the beginning of a great solution for Austin, which was ranked first in the nation in Richard Florida’s report for being economically segregated.

But there’s a problem planners didn’t foresee. The Travis County Appraisal District has decided to tax the affordable homes at the market rate. The appraised value of Rector’s home has increased more than $187,000 in two years.

“I don’t know in the next three, four, five years if it will be an affordable home anymore,” says Rector.

Three homeowners are taking the appraisal district to court. Mueller is trying to negotiate a solution to the tax problem so it can ensure the 290 affordable homes in the development continue to be just that.